The Hague School of European Studies-HEBO English Stream

Supervisor:        Mrs N. A. Ariëns

                         Business Coordinator of HEBO Department

Prepared by:        Do Thi Thanh Nha – 20045006 – 3ES1

                        Business Management

Preface

 First of all, I am really grateful to the Management Team of Dutch Lady Vietnam Company for offering me a great opportunity to undertake my work placement at the company; and to Mr Tran Trung Kien - Trade Marketing Manager of Trade Marketing Department for his initial inspiration for my research project.

Besides, lots of thanks should be deserved to those who have assisted me in improving my understanding of particular aspects of the subject and related areas. Hence, I would like to express my sincere gratitude to my mentor - Mr. Thai Van Tuan for his valuable assistance and guidance during my internship period; as well as to my supervisor- Mrs. Ariens for her kind advices and useful feedback on the report.

Additionally, my family and my friends are also deserved many thanks. Without their warm encouragement and support, the completion of the report would not have been possible. Last but not least, I could not complete the report without the knowledge I have obtained from HEBO courses.

 Once again, I would like to express my sincere thanks to them all for their great contributions to the accomplishment of the report. I sincerely wish that my findings on the report would be a useful contribution to the prosperity of Dutch Lady Shops in particular; and of Dutch Lady Vietnam Company as a whole.

With kindest regards,

Do Thi Thanh Nha

Den Haag, June 2007

Table of contents

CHAPTER 1.  INTRODUCTION        5

1.1       Short overview        5

1.2       Central queston & Sub- questions        6

1.3       Research method        7

1.4       Short preview of all chapters        8

CHAPTER 2.   COMPANY DESCRIPTION        9

2.1        Profile        9

2.2        History        9

2.3        Vision        10

2.4        Mission        11

CHAPTER 3.  TRADE MARKETING OVERVIEW        12

3.1        Background        12

3.2       Channel structure & definition        12

3.3       Dutch Lady Shops background        18

CHAPTER 4.  INTERNAL ANALYSIS        21

4.1       Shopper analysis           21

4.2       Retailer analysis        24

4.3      DL shops activities in the past         27

4.4      Conclusion: Strong  points & Weaknesses        31

CHAPTER 5.  EXTERNAL ANALYSIS        32

5.1         Macro enviromental factors        32

5.2        Competitor analysis:        35

5.3        Conclusion: Opportunities & Threats        40

CHAPTER 6.   SWOT ANALYSIS        42

6.1        Swot  analysis        42

6.2        Confrontation matrix        43

CHAPTER 7.   CIRCUMSTANCES & STRATEGIC CHOICE        46

CHAPTER 8.   TOP INITIATIVES & ACTION PLAN        48

CHAPTER 9.  CONCLUSION        53

BIBLIOGRAPHY        54

APPENDICES        58

APPENDIX 1: INTERVIEW MR THAI VAN TUAN        58

APPENDIX 2: INTERVIEW MS PHAM NGOC MINH CHAU        59

APPENDIX 3: PICTURE ILLUSTRATIONS        61

 

Chapter 1: Introduction

1.1    Short overview

Dutch Lady Vietnam (DLV) is a one of the biggest manufacturers of dairy and dairy-related products in Vietnam. DLV is originally a joint venture between Royal Friesland Foods (Friesland Coberco Dairy Foods) and a Protrade based in Vietnam with its main establishment in Binh Duong province and a network of regional sales offices in other parts of Vietnam. The parent company- Friesland Foods is one of the largest dairy companies in the world with its headquarter in The Netherlands and business activities in many countries while a Protrade is one of the commercial business units of Binh Duong province.

Dutch Lady Shops (DL Shops) are the branded and selective shops that belong to DLV Shop channel network in Vietnam. With a limited number of outlets in the first few years of its establishment, there are now approximately 1500 DL shops out of 12 650 shops which DLV has covered (DLV DFD sources). The profit that DL shops bring to DLV is, however, significantly more than its coverage. In fact, DL shops have contributed about 50% and 20 – 25% its turnover to the total turnover of DLV Shop channel and of DLV annually (DLV DFD sources). Thanks to its great contribution to the DLV Shop channel in particular and to the company as a whole, DL Shops has been proudly considered as a flagship among DLV distribution channels for years.

However, the image of DL shops as well as its performance within recent years has been below expectations. There is a decrease in sales and loyalty among DL shop network. As a result, DL shops have gradually lost their strong position which they used to occupy in the Vietnam’s market. The society is constantly developing; thus the market is continuously growing too. Meanwhile, there had not been a timely reaction from DLV in order to keep up with the pace of market evolution. Consequently, the initial image of the DL shops has been faded by the time. Now, it is time for DLV to re-position DL Shops network in order to keep pace with the evolution of the market and regain its powerful positioning. Hence, this thesis is about to cover the above - mentioned matters and to find out the best solution for DL shops afterwards.

  1. Central question & Sub-questions

The central question is:

 How could DLV re-position DL shops in order to keep pace with the evolution of the market?

Based on the central question, the subsidiary research questions can be formulated. A breakdown of sub-questions is as follows:

1.3        Research method

The research design was mainly carried out by mean of the qualitative research strategy through desk research, case study and field work.

  • Desk research: study of documents and information from the media; as well as bibliography and search engine; for instance, Internet, Intranet, Newspaper and Internal Publication.
  • Case study: in-depth interviews with the interview methodology: face- to- face interviews with retailers, shoppers of DL shops and Trade Marketing staff concerned.
  • Field work period: April 2007 in some key cities in VN.

A preliminary research was conducted at the very beginning of the work placement to discover the general background of DL shops operation in Vietnam in the past few years. Then, a later desk research was carried out to investigate the contemporary circumstances and the pivotal issues of DL shops. In addition, a large number of market visits has been performed in order to observe the market and to directly conduct face-to-face conversations with retailers and shopper of DL shops. Finally, some interviews with the Trade Marketing staff involved which provided a lot of highly valuable information for the report could not absolutely missing.

1.4    Short preview of all chapters

In order to answer the central question, a number of factors need to be investigated. A structure of the report is as follows

-The structure of the report -

The report is going to be divided into three main parts with several appropriate chapters in each part. The first part of the report will include three chapters in which there will be a short introduction about the subject of the report, the understanding of DLV Company and Trade Marketing department. After that, the second part of the report which contains two chapters will deal with the situation analysis of DL shops. In the situation analysis, the internal and external aspects are going to be examined. Finally, the next four chapters of the last part of the report will provide a SWOT analysis and the recommendation for DLV. In the SWOT analysis, there will be confrontation matrix which provides some possible strategies for DLV. Then, a formulation of strategic choice together with the top initiatives and action plan will be established. The conclusion with the desired poisoning for DL shops will bring to an end of the report.

Chapter 2: Company description

2.1        Company profile

Dutch Lady Vietnam who is a food and beverage company established its business in Vietnam in 1996 with an investment capital of 50 Million USD and has been operating for 10 years now. Its core business is the research & developing, manufacturing, marketing, sales and distribution of branded milk products. DLV markets several key brands: Dutch Lady, Friso, Fristi, Completa, Calcimex and Yomost.

Being operated in VN since 1996, DLV has been continuously demonstrated a healthy performance. Its succes goes at a quick pace with the progression of VN. DLV’s biggest achievement is to contribute to the improvement of Vietnamese people’s lives. This is well demonstrated through not only offering high quality products, but also helping to build a healthy community. This is also the result of good support and cooperation between DLV and its stakeholders.

DLV’s major success factors are:

-well-known brands

        -good consistent product quality

        -innovation

        -consumer orientation

        -reliable business partner

2.2        Company history

From Foremost to Dutch Lady, the name of the operating company Dutch Lady Vietnam (DLV) has a rich history of significant milestones:

  • In 1924: the first 150 cartons of Dutch Lady Sweetened Condensed Milk were imported and sold in Vietnam
  • In 1993: the representative office of DLV was established in HCM city
  • In the early days: Binh Duong province government has greeted Dutch Lady Vietnam for its building the factory
  • 28th February 1996: the first Commercial Invoice was officially issued. Many of DLV products were launched into the market
  • 1997: DLV has build up a distribution system throughout Vietnam 
  • In 2000: a new company’s name “Dutch Lady Vietnam”
  • In 2005: has invested the most advanced technology of new unique appealing bottles
  • In 2006: build a secondary factory in Hanam with an initial investment of 20million USD
  • Up till now, DLV’s growth has paralleled the growth of Vietnam.

2.3        Vision

The corporate vision of Dutch Lady Vietnam is “Improving Life”. DLV shares a common goal of the improvement of life Vietnamese people to improve the future of Vietnam. Being fully aware of the vision of improving Vietnamese people’s life, DLV keeps getting to know consumers’ taste, understanding their life style changes, and most importantly, catering to their nutritional needs. The ties between DLV and the Vietnamese people go far beyond a population that simply opts for the best product. DLV is anchored in the society, partly thanks to the fact that DLV demonstrates a major responsibility towards the society; the company initiates or participates in various kinds of social and educational programs in VN.

A long list of social initiatives is a good reflection of the efforts DLV aimed at improving the quality of life in VN. The company puts every effort into doing what Vietnamese society expects from them: taking the lead role in developments and being the first with new initiatives. It means DLV will continuously carry on investing in brands, product innovation, marketing, communication and cultivating their social program in order to improve the quality of life in VN (Magazine 3 Frieslandfoods, June 2006, Volume 7).

2.4        Mission

According to DLV, its mission is to “develop, produce, and market a broad range of reliable, natural, and nutritious dairy products that should contribute to the well-being and vitality of life”. Quality policy is an integral part of DLV’s mission statement. It provides the framework for establishing and reviewing the quality objectives (DLV Quality manual and Procedures, 2003, p.14):

-Reliable products: DLV wants to continue to be the leading manufacturing, marketing and sales company of branded milk products of consistently superior quality in Vietnam

-Availability: DLV wants its milk products to be consistently visible and available throughout Vietnam. To improve this, DLV is expanding its distribution network, strengthening its sales force, and stressing the awareness brands

-Improvement and innovation: DLV commits to continually improve its product quality and the effectiveness of Quality management system to gain customer satisfaction, confidence and preference

-Flexibility: DLV will be flexible to meet the changing economic circumstances and customer needs. This requires an effective Quality management system operated by qualified staff

-Accountability and transparency: DLV will have a management system with clearly defined responsibilities and authorities are clear and accessible to all employees so that people can act in an ethical, co-operative and result-oriented way.

-Motivation and training: DLV recognizes that a skilled, well-trained and motivated work force will improve efficiency and is essential to realize above goals

Chapter 3: Trade Marketing overview

3.1 Background

3.1.1 Key milestones

  • Before the Trade Marketing presence:
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-One standard approach to different retailers

-One common offering for shops.

-Brand presence at POP was weak.

-Different shopper’s needs were served in a common way.

-No standardized merchandizing.

-Strive to deliver sales objectives.

  • In late 2002, the Management Team of DLV decided to establish the Trade Marketing Department to adapt to the evolution of the market
  • July 1st 2003, the full structures Trade marketing department was presented

3.1.2 Mission

To bring DLV brands closer to more shoppers through intermediate forces, in a way that supports our brands strategies via superior customers and traders understanding, innovation and ...

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